Sebi doubles AIFs overseas investment limit to $1.5 bn after talks with RBI

Industry players say the move will help the Rs 4.4-trillion AIF industry as the current allowance in many cases was getting fully utilised

The Securities and Exchange Board of India (Sebi) on Friday doubled the overseas investment limit of alternative investment funds (AIFs) to $1.5 billion. The market regulator said the decision was taken following consultation with the Reserve Bank of India (RBI).

In 2015, Sebi had created a $500-million allowance for overseas investment. However, domestic AIFs were only allowed to invest a fourth of their corpus overseas. Also, overseas investments were required to have an Indian connection. In 2018, the limit was increased from $500 million to $750 million.

Sebi’s circular said the overseas investment conditions remain unchanged.

Industry players said Sebi’s move will help the Rs 4.4-trillion AIF industry as the current allowance in many cases was getting fully utilized given the rapid growth in the industry.

“Doubling of the overseas investment allowance to $1.5 billion will enable Indian AIFs to invest overseas and generate strong returns for their investors. This will allow greater Indian participation in global companies and will accelerate the growth of the Indian AIF industry overall,” said Siddarth Pai, Founding Partner of 3one4 Capital.

“The enhancement in limits is a positive move in these uncertain times which will open newer windows of opportunities for various AIFs for them to invest outside India and also allow the Indian investors to be a part of the global growth trajectory,” added Sahil Shah, Of Counsel, J Sagar Associates.